Transpacific asset sales, debt cuts to continue: CEO

Newly minted
Transpacific
Industries chief executive Robert Boucher said the waste management group would continue to divest assets and pay down debt as it reported a resurgence in December half net profit to $167.1 million from $42 million a year earlier.

Mr Boucher said industrial markets remained tough with ongoing weakness in the manufacturing sector weighing on Transpacific’s liquid processing volumes, which fell 5.8 per cent.

After a long strategic review focused on driving operational efficiency, Mr Boucher said he will continue to drive change and fine-tune operations as he simplifies the business by selling non-core assets.

“Divestments and asset sales will continue and we will pay down our debt. There are 11 businesses we have not discarded yet and we are looking at starting dividends again," he told analysts.

The group is pursuing the sale of its New Zealand arm, which is not expected to be finalised until later in the financial year. The sale of its plastics manufacturing business is under contract and awaiting approval from the Australian Competition and Consumer Commission.

Moelis & Co analyst Adam Michell said he continues to see Transpacific as a a good way to get exposure to a broader economic recovery given the margin leverage in the waste business and its improving balance sheet.

Transpacific’s gross profit, as measured by earnings before interest, tax, depreciation and amortisation, slipped to $192.9 million from $205.3 million, which was mainly due to the sale earlier of the group’s commercial vehicle sales arm.